"The worst fears are not being realized,'' said Jay Feldman, an economist at Credit Suisse Holdings Inc. in New York. "We still think growth is going to be soft,'' though tax rebates distributed by the government under a stimulus package may "keep us above water,'' he said.

Treasuries fell after the sales report indicated consumers are weathering record costs for gasoline, a slide in home values and declines in payrolls. Today's figures offered a sign the economy may skirt a contraction this quarter and reinforced speculation that the Federal Reserve has finished lowering interest rates after seven reductions since September.

0.5% isn't exactly stellar growth, but a pattern seems to be emerging. The worst case scenarios aren't materializing (or at least haven't yet). Only a few months ago newspapers were screaming about a coming "depression" or "collapse." Now, predictions have become more circumspect. So far, the data suggest either a quarter or two of stagnant growth, or possibly, a mild recession.